What will happen to Carillion’s ME projects?

16 January 2018 | By CM Staff

Last March Al-Futtaim Carillion won a £490m contract from Expo 2020 Dubai to deliver the Theme districts (Render from Carillion)

Uncertainty surrounds Carillion’s projects in Dubai and Oman after the contracting and services giant went into liquidation.

The company had been trying to extricate itself from risky business in Saudi Arabia, Qatar and Egypt, but last year it won a series of big schemes in Dubai, including for the Expo 2020 extravaganza (pictured) and Oman through long-established joint venture (JV) partnerships there.

In Dubai the JV is Al-Futtaim Carillion (AFC) and in Oman it is Carillion Alawi.

Neither JV has issued statements yet on today’s demise of Carillion.

The Middle East had become a big drain on Carillion’s finances. Announcing an £845m hole in its finances in July last year – in the form of a “provision” to cover loss-making schemes – Carillion attributed £314m of that to its Middle East operations.

Signs of trouble were evident last year as Carillion was reported to be fighting to recover £200m owed on a major contract in Qatar linked to the 2022 FIFA World Cup.

However, last year Carillion announced two major contracts won in Dubai with AFC, and one in Oman with Carillion Alawi.

In Dubai, in January it celebrated a £160m contract to deliver two Grade A office buildings in the latest phase of One Central, a commercial scheme developed by Dubai World Trade Centre. AFC’s third One Central contract, it was due for completion at the end of 2018.

Then in March last year AFC won a £490m contract from Expo 2020 Dubai to deliver the Theme districts and Public realm works at the prestigious World Expo site in Dubai South.

This project, to build 147,000 sq m of single story basements and 98 pavilion buildings totalling a gross area of 220,000 sq m, was scheduled for full completion in mid-2019.

In Oman, Carillion Alawi, a 50:50 joint venture with the Zawawi family, was named preferred bidder in November 2017 for a £240m design-build contract for the New Sultan Qaboos Hospital in Salalah. Design was to begin immediately, with construction starting this year. The client was the Oman Ministry of Health.

At the time Carillion said the JV expected another letter of award to be signed “shortly” for a second hospital in Khasab, on similar terms, with a contract value of £120m.

Carillion said both Oman contracts were procured “via lower risk procurement routes, for example through seeking support from UK Export Finance to secure project finance for customers”.

The status of these contracts in Dubai and Oman are currently unknown.

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